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Why On Earth Would Apple Build A Television Set?

A number of sites are reporting that last year Apple killed plans to add a line of 4K TVs to its product range. Which beggars the question, who at Apple thought that this might be a good idea? It also tells us that Apple is clearly not scared of investing in the development of ideas that it is prepared to kill if they don't fit the company's business requirements.

Apple is mostly an iPhone business. It brings in such a large percentage of the company's revenue and profits that it is the most important thing they do. When the iPad came to market the feeling was that this was going to be as big and successful.

Five years on we know that isn't the case.

After its initial enormous growth the iPad stalled and then began a sales decline that continues today. Its possible that the decline began earlier than we see in the sales numbers because the release of the iPad Mini masked comparable sales performance.

Nonetheless, Apple must have known that the iPad wasn't going to be another star performer 12-18 months ago. I've talked about the reasons why that is the case before, primarily around use cases and purchasing routes and how they differ to a smartphone. The bottom line is that the usable life of an iPad is much longer than that of an iPhone and that stymies growth.

If the tablet market is mature then the market for televisions is drawing its pension. Despite the advent of new technologies and better manufacturing processes TVs are, pretty much, just TVs. Apart from the niche market of enthusiasts TVs are bought infrequently and on the basis of price versus performance metrics which firmly favour price. Once we buy a new TV we only replace it when it begins to fail, and TV technology is pretty reliable these days.

So if the tablet market is stagnating how would the TV market look at a new Apple 4K television? Apple never really sales close to the price end of the price v performance scale, narrowing its absolute market considerably, and whilst its Apple TV does a good job of making TVs smart, that's mostly down to its low price and ready availability.

For those individuals and business that do buy a top end Apple TV the upgrade sell is going to be difficult. Apple has committed itself to delivering feature upgrades to older hardware through its iOS and OS X programmes and TV buyers would be right to expect the same. Is this buyer really going to rush out and buy another Apple TV is three years time because it has a bigger screen or is lighter? Given that this has been all that Apple has been able to offer on the iPad that may prove to be a problem.

Logic dictates that a television set manufactured by Apple would prove to be less popular and hit peak sales much quicker than the iPad. For Apple it makes far more sense to keep pushing its hobby Apple TV (at very good profit levels) and let others do the hard slog of selling televisions.


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